EM Debt: Navigating a Shifting Macro Backdrop

February 2019 - 7 min read

After a rocky 2018, the picture may be brightening for emerging markets debt. From rising rates to trade wars, some of last year’s headwinds look to be receding, at least for now. Barings’ Ricardo Adroguè and Omotunde Lawal highlight opportunities they’re currently seeing.

In this Q&A, Barings’ Head of Global Sovereign Debt and Currencies, Ricardo Adroguè, and Head of Emerging Markets Corporate Debt, Omotunde Lawal, discuss possible outcomes of the trade tensions with China, Venezuela’s evolving status as a political hotspot, and why we have high conviction in Mexico.

When considering emerging markets debt as a broad universe, how would you frame the issuer types, overall market size and associated risks?

OMOTUNDE: When we speak about emerging markets debt, we're actually talking about three distinct sub-strategies. The first is hard currency corporates; the second is hard currency sovereigns; and the third is local bonds—that is, bonds issued in the countries/local jurisdictions themselves. Whereas the local universe is roughly $7.5 trillion, the hard currency and corporate universes are roughly $1 trillion and $2.1 trillion, respectively. This compares to the U.S. investment grade universe of $5.7 trillion and the U.S. high yield universe of $1.5 trillion. From a diversification standpoint, over 70 countries are represented within the space, and issuers span the ratings spectrum from AA through CCC. So, we are talking about a very broad asset class.

Related Content

You are now leaving Barings.com. We make no representations about the accuracy or completeness of the information contained in any external sites and assume no liability of the content or presentation of external sites.

The opinions and other information contained herein, whether express or implied are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

This material should not be construed as a recommendation, and Barings is not soliciting any action based upon such information. Additionally, the strategies and funds may not be available to all investor types in all jurisdictions.

Please Select Your Client Portal:

Welcome to Barings. We have organized the information on our website to be specific to the needs of the global investor community, and also to reflect the needs of investors across different regions of the world we serve.

Please Choose Your Location

Please Choose Your Location

Americas

Canada

United States

Asia Pacific

Australia

China (中国)

Hong Kong - English

Hong Kong (香港 – 中文)

Japan (日本)

Korea (한국)

Singapore

Taiwan (台灣)

Europe

Austria (Österreich)

Belgium

Denmark

Finland

France

Germany (Deutschland)

Ireland

Italy

Luxembourg

Netherlands

Norway

Portugal

Spain

Sweden

Switzerland

United Kingdom

Middle East

DIFC

Global

Global

Please Select Your Investor Type:

You are now leaving Barings.com. We make no representations about the accuracy or completeness of the information contained in any external sites and assume no liability of the content or presentation of external sites.